Coalition of pharmaceutical procurement quietly emerges from the provincial coalition

Business Club November 13 News

1 Conditions for Procurement Alliance
Recently, the "Alliance" has become the hottest word in the pharmaceutical retail industry. It is clear that the pharmaceutical retail industry has developed so far that the alliance has become a general trend. For the reasons for the emergence of the procurement alliance, the author thinks there are two main aspects:
The first is that large chain pharmacies go beyond pharmaceutical companies and medical generations to directly request manufacturers to supply them. The widespread use of local subsidiaries to concentrate on headquarters for joint procurement (joint procurement) or collective procurement (consolidated procurement) has resulted in strong The purchase price advantage, and small and medium-sized chains around the country because of the small number of stores, small scale, do not have the ability to purchase directly from the manufacturers, so the alliance has become the only way.
The second is the price war in cheap pharmacies, which leads to a sharp drop in the profit rate of chain pharmacies. After parity, other profit models have not yet been formed, coupled with unspoken rules of base price, cash price, wholesale price, and retail price in drug circulation in China. Chain pharmacies purchase goods from pharmaceutical companies, and at least a few links are added to the price, and the purchase price is high. Chain pharmacies get their goods from individual agents (from the bottom price of the current funds from the manufacturers) or from the salesman of the manufacturers (most of the salesmen of general drug manufacturers are also taking goods from their own factories at the reserve price), and the pharmacies get only pharmaceutical companies. And a generation of liquidity advance only. In both procurement methods, the prices actually obtained by chain pharmacies are generally high, which means that their gross margin is low.
In these two contexts, the chain pharmacy procurement alliance springs up. The first national coalition to eat crabs was the PTO Alliance (Shanghai Petterou Enterprise Management Co., Ltd.), which was formally incorporated in March 2005.

2 Development status and trend
The author predicts that the development trend of the various leagues is as follows:
There will be 3 to 5 national alliances.
Although the PTO Coalition (which currently has nearly 130 members nationwide) and the Tegel Union have already begun to take shape, there will be more coalitions in the country. I expect there will be 3 to 5 homes. This is because China is too big. The excessive demand for small and medium pharmacies is very strong. At present, the operational mode of these alliances is that a city only develops one member and develops at most two. There are more than 620 prefecture-level cities in the country, and a prefecture-level city also has 3 to 5 decent chain pharmacies. Therefore, the national level The pharmacy procurement alliance has a capacity of 3 to 5, and once the number of members of each alliance reaches 300 or more, the difficulty of managing services will increase dramatically, which is equivalent to opening chains in different places. Therefore, it is impossible to have many alliances for procurement. The number of each alliance is about 1,000, which can meet the needs of members across the country.

3 Regional Procurement Alliance will also grow
The coverage scope of a regional alliance is mainly regional. For example, regional alliances may occur in the northeast, southwest, northwest, central China, southern China, northern China, and eastern China. (For example, Tianyuan Pharmaceutical Co., Ltd., which is funded by eight local pharmacy stores in Wuhan It was a regional coalition that radiated to Hubei Province and some cities in northern Hunan. The operation of regional alliances is very difficult. The main problem is the scale and logistics issues. The main unit must have corresponding commercial wholesale companies, and there are drug distribution companies in chain pharmacies, and they must have relatively large capital investment. The variety is 500. There are enough athletes within the area, and they are mainly based on regional Chinese medicine varieties. Since western medicine is universal, it does not have much locality, so it is not its superior category.

4 Provincial alliances will emerge in large numbers
Currently known provinces such as Heilongjiang, Jilin, Shandong, Zhejiang, Shaanxi, and Henan have corresponding small-scale alliances, the provincial procurement union. The author estimates that more than half of the provinces across the country are likely to have such small-scale procurement alliances. The products of these alliances are suitable for 100 or less, and are more popular varieties of Chinese medicine in this province.

5 Monomer Pharmacy Procurement Alliance and Other Alliances
Some small procurement alliances within a small area may be limited to one or a few cities. For example, the Guangzhou Golden Lily Purchasing Alliance (the current development of the Union has an expanding trend), Kunming, Wenzhou area also has a similar procurement alliance. According to the author's understanding, Shenzhen is brewing to set up a procurement alliance. The united pharmacy procurement alliance planned by Shandong serves only local individual stores.
In addition there are health products procurement alliances, cosmetics procurement alliance will come into being. In fact, drug and cosmetic products are the diversified directions that chain pharmacies must consider, and they should be carefully explored. As for health products, most of the domestic health care products companies are themselves a kind of alliance, but they are marketing companies. Most of them do not have approvals. They are looking for manufacturers of OEMs and use their own direct supply terminals. In addition, the current major alliances are also developing varieties such as health products and cosmeceuticals. Therefore, if such alliances can become a climate, we might as well wait and see.